Market continues to weather storm

Property sector maintains resilience as pandemic challenges continue

Mountainous area

THE COVID-19 pandemic has continued to make its presence felt right across Scotland’s hospitality industry.

From lockdown at the turn of last year through restrictions to freer trading before ending last year under another cloud of uncertainty – to say trading conditions over the past 12 months were challenging would be something of an understatement.

Despite this, the licensed property market is said to have proved resilient, with transactional activity and values generally holding firm.

Brian Sheldon, regional director of hospitality for Scotland and the northwest at Christie & Co, said market activity over the past 12 months largely mirrored that in the wider hospitality industry.

“There were plenty of buyers, investors out looking across Scotland, with enquiries being received from not only local but also national and international buyers,” he said.
“The regional hotel market was very much in demand whilst the public house sector was less so.

“Values held up and prices being paid were at or around 2019 levels.

“The market in 2022 will, we hope, continue along the same path as 2021 unless there are some big bumps ahead. The Omicron variant is the current obstacle in our path; however, until we know more about it no one can predict. From our perspective, we saw transactions continue through the second half of 2020 much to many people’s surprise during a turgid time and this continued through 2021 with Christie & Co completing over 330 transactions in hospitality across the UK.”

A similar assessment was given by Peter Seymour, director of hotels and leisure at Graham & Sibbald, who said the market has “reacted remarkably well” to the challenges brought by the COVID-19 pandemic.

And he is hopeful that resilience will remain in the months ahead.

“There was effectively a pause button hit in March 2020; however, since May 2021, we have seen a significant increase in activity and transactional volumes,” he said.

“Whilst conditions for lending are still more difficult than they were pre-March 2020 we are seeing an increasing number of mainstream lenders in the marketplace. Deals are no longer solely cash purchases, which is increasing activity and confidence.

“I think that if there are no more lockdowns and liquidity continues to improve then the market is in a great place. Activity will inc

The need for stability was echoed by Jonathan Clough of Smith & Clough, who said the buoyancy of the market increased as restrictions were eased last year.

“This is a resilient sector and there are many pragmatic operators who are taking a long-term approach and are still continuing with their growth plans,” he said.

“Uncertainty is not good for any market, but if businesses are able to trade fairly normally without many restrictions then confidence in the sector will continue to grow, and hopefully the buoyant market we have seen over the last few months will continue into 2022.”

Alan Goldie of The Restaurant Agency agreed, saying there continues to be “healthy demand for businesses”.

“There remains positivity from buyers or perhaps the word is ‘opportunity’ in the knowledge the new normal moving into 2022 will still be less restrictive than the past 20 months,” he said.

“There appears an appetite within the lending sector and this will only increase if interest rates creep up with most deals brokered by independent agents and/or a strong element of self-financing.”

The pandemic has also had some influence on the type – and location – of businesses buyers are seeking.

Demand for hospitality businesses in tourist locations remains high, and suburban outlets are said to have attracted higher levels of interest with the shift to working from home.

Stuart Drysdale, of Drysdale & Co, said: “For hotels, high volume tourist locations such as Perthshire and the A9 corridor, the west coast, rural Highlands and NC500 continue to be popular and we are seeing an increase in enquiries from buyers south of the border as relocation and remote working becomes the norm.

“Businesses such as lodge parks or serviced apartments are increasingly popular as there is potentially a shift to an increased number of self-catering holidays and staycations.”

That was echoed by Peter Seymour of Graham & Sibbald, who said rural businesses with strong tourism bases are in particular demand.

“Medium-sized hotels are also seeing strong levels of demand with several regional groups looking to expand,” he said.

“Demand and supply seem to be in balance at the moment which is good for transactional volumes.”